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A CIO Conversation: Government CIO has the state as his oyster

Richard Rognehaugh, CIO for the state of Tennessee, discusses the pluses of having an entire state as his customer, the challenges of having the taxpayer as the boss, and compares his public gig to his previous life in the private sector.

Richard Rognehaugh has done it all -- CEO, CFO, CIO, public sector, private sector, you name it. But the latest...

venture for this IT veteran could be the most rewarding -- CIO for the state of Tennessee. He talked with about the pluses of having an entire state as his customer, the challenges of having the taxpayer as the boss, and compares his public gig to his previous life in the private sector.

Would you recommend a government CIO job to a private CIO?

Rognehaugh: Yes. It is certainly rewarding in terms of the sheer scope and scale of technological exposure. Assuming candidates can balance their personal finances by taking the likely cut in pay, the role of a public CIO definitely allows the opportunity for a large span of responsibility and exposure to what is generally a much wider range of technology than any single industry segment. On a good day, we can truly improve some very real aspects of life for the citizens we serve.

What kinds of new technologies is the state looking at now? Do you see any big changes or killer apps coming down the pike?

Rognehaugh: Some state government killer apps don't necessarily translate directly, but there are some exciting transformations possible these days. Moving Tennessee from an 18-year-old COBOL application supporting its unique Medicaid system to a modern system with imaging, CRM and call center function, and ERP-like financials is a great step forward.

The governor's office is moving the state toward something that is called "1-Stop Online Business Permits," which does a marvelous job consolidating today's separate processes as various permits are researched online and speeding the applicant toward approval. Our colleagues in Utah deserve credit as pioneers in a similar project. The benefits of enterprise directory deployments for added network visibility and domain management is promising, and the use of Global Directory provisioning economies amounts to fairly low-hanging fruit for a modest investment. Wireless handheld devices aren't new, but they are making steady progress to serve needs for public CIOs. Inside the geographic information systems field, we are excited about location-based services, and we are beginning to think about what added value we could get from tying the existing database information to any range of geographical coordinates to allow people to use the Internet or handheld devices to find key office buildings, day-care centers and other public locations.

How much offshore outsourcing does the state do or plan to do? Do you agree with the current legal maneuvering on both the federal and state levels to ban the offshore outsourcing of government work?

Rognehaugh: It is fair to say that there are strongly differing opinions. We currently have some small amount of work being done offshore. The decisions for business offshore must be addressed as either a national or state legislative agenda. Already, some public CIOs and companies doing business related to DoD war-fighting capability or other national secrets have felt that they need to take certain actions to protect national interests. Until these issues get sorted out, either way CIOs must write their functional and technical requirements tightly, with good payment milestones. A few corporate websites and publicly posted Board or Trustee strategies reflect their plans to either grow or address their offshore interests.

Does the state of the economy have anything to do with the state of the state?

Rognehaugh: I think the state of the economy does directly impact the state of the state, in the sense that all good IT leaders should continuously have their small stack of unfunded requirements ready and waiting, so that they can compete for funding against other priorities when state revenues pick up.

State budgets have been tight across the country -- Tennessee is certainly no exception. Has IT been cut?

Rognehaugh: Yes, we took a 9% cut in 2003. That was difficult, because we're like most state government IT shops in the sense that we earn our living through a series of complex charge-backs. Our costs of operations or agency demands for our services were not [likewise] being reduced 9% in key areas. But we weren't alone. In fact, it was the vision and aggressive leadership of Gov. [Phil] Bredesen to get the budget under control. That, along with the active support of the Legislature, should allow Tennessee to get well before other states that don't make the hard choices in unison on both sides of the political aisle.

How does Tennessee stack up against the rest of the nation in terms of IT? I see the statewide network and the state website have been ranked No. 1 in their categories.

Rognehaugh: It always begins with good people. There are many talented IT leaders in this state. We'd also like to think that Tennessee is a leader in many other visible respects. Last year, our state network did well within an awards process of the National Association of State CIOs, and the competition was keen. We've been fortunate to have visionary leadership in past years regarding e-government and e-commerce, and have been within the top four in the nation for three consecutive years. We got a first-place ranking last year. Online, we have now completed more than 17 million bona-fide transactions of a financial nature or other key business process, and we have 15 million hits a month on our site []. The various state agencies are a positive driving force to leverage technology that makes sense. Collectively, we're all interested in staying on the leading edge.

Did you make a lot of changes when you started?

Rognehaugh: I made a few. I was given tremendous support in reorganizing the top level of our central IT organization. Before, there were 17 executive directors. Now there are four. We enhanced the salaries necessary to recruit and retain key IT leaders, and we used an international leader in salary and compensation to review the pay for WAN specialists, business analysts, IT security managers, IT project managers, and an array of database job classes. We added new processes for IT project management and added a dual staff of expertise -- one on the side of taking new projects from their inception until final implementation, and a complementary team on the hardware and infrastructure side.

Within six months of trying this new approach to make more IT projects successful, we had oversight for a quarter of a billion dollars in new projects. We created a new focus and staff for enhanced disaster recovery, including a new cold site, and moved the state's direct-access storage device (DASD) from 5 terabytes of capacity to 8, then to 20. We began the migration of 1,750,000 cartridge tapes to virtual tape. Because of federal homeland security and cybersecurity realities, we formed a new monthly IT Security Task Force in mid-2002, and added new staff toward a 24/7 ability to guard against network intrusion.

We also took an important decision to our steering committee to essentially reverse the previous trend of consultant outsourcing. It had gotten out of hand -- to the point where our state employees sat in cubicles next to one of 380 consultants who earned much more money to do the same job. So, with an initial central staff of 350 here against an overall 1,700 IT positions in all state agencies combined, we now have 500 central staff versus 1,900 overall, due to this special initiative. We saved $4.5 million in the first year, $5.5 to $6 million each year after. Our goal is to ultimately seed some of that savings into salary adjustment[s] that should keep us competitive.

What kind of shape was Tennessee's IT infrastructure in when you came on board?

Rognehaugh: I stepped into the shoes of a true legend who had been the CIO of Tennessee for 15 years, and [I inherited] a supporting cast of very dedicated IT leaders. Beyond this point, I will use the word 'we' to reflect recent team achievements since my arrival. When the size of the playing field is an entire state, there is truly an exciting range of deployed technology. The state serves as the central provider or oversight for network services. It's also an ISP, ASP, has SAN applications, a statewide data center of nearly three acres, a statewide IS College to ensure our folks get good training, video teleconferencing on H.320 and .323, imaging, multiple wireless applications, data warehousing, GIS, e-mail for 38,000 users, and a cybersecurity Network Operations and Security Center (NOSC).

Is establishing ROI or TCO for an IT project dramatically different for a government CIO than it is for a private CIO?

Rognehaugh: It's tough to generalize for every CIO position and environment, but I have observed that the ROI expectations are more difficult with state IT than anything else I have seen outside of Washington, D.C., at the federal level. Of course, they have the equivalent of Congressional subcommittees to ensure ROI questions are satisfied for public funds -- I have the memories to prove it. But having seen or developed four different corporate TCO/ROI systems in the last several years, Tennessee has a fairly sophisticated process for new projects. The leadership expects that agencies will "compete to win" during austere budget years, so our folks submit fairly comprehensive proposals against a rigorous format and a 10-year life cycle. We've added a new set of concurrent and retrospective IT project reviews to ensure that cost overruns of greater than 10% or scope changes are immediately picked up on the radar. All projects [of] more than $100,000 are tracked on a standardized monthly format that is available on our intranet for all department leaders to see, with a "dashboard" style of indicators highlighting cost and schedule.

Of course, there are times in both the public and private sectors when leaders are compelled to push IT projects forward with very little ROI or TCO because the mission calls for them to "just do it" and fund accordingly. For example, we found through national surveys that very few states tackling enterprise resource planning (ERP) projects demanded an ROI -- they just found the need to update business processes and legacy systems to be compelling. We found the same results for e-commerce or e-government projects. In both cases, we will likely continue to use a solid cost benefit analysis for these investments.

You've worked in both the private and public sectors. Which is more challenging and why?

Depending upon the economic cycle and the exact state or public scope of responsibilities, both sectors have their growth and budget-cutting realities. They have their risks and rewards, too. Until two years ago, I would have said that the private sector was tougher. But that was before I learned to enjoy all the complexities of articulating a statewide mission -- in concert with nearly 30 senators, 100 representatives and 45 state agency commissioners or executive directors, who are all trying to improve service delivery for our citizens. And there are another 200 or more equally insightful deputy commissioners, assistant commissioners, budget officers and 45 of our individual state agency IS Director colleagues, and, of course, the truly visionary CEO in the State Capitol. It all adds up to a tremendous group of talented leaders. So let me just say that the public sector will keep even a workaholic fairly well challenged.

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